RBI’s press note on new KYC norms for opening Bank Accounts

The Reserve Bank of India yesterday released a press note relating to Know Your Customer (KYC) norms for opening bank accounts. The objective of this is to bring awareness among the general public about the KYC simplification measures taken by the Reserve Bank in the recent times with a view to helping the common man in opening bank accounts.

You can now open a bank account –

By just submitting a ‘proof of identity and address proof’ and a recent photograph

Your current and permanent addresses can be different. Still you can open a bank account by submitting the permanent address as the proof of address. You can just declare the current address as communication address.

Even if you do not have any of the required documents still you can open a bank account.

Measures taken for KYC simplification:

1. Single document for proof of identity and proof of address

There is now no requirement of submitting two separate documents for proof of identity and proof of address. If the officially valid document submitted for opening a bank account has both, identity and address of the person, there is no need for submitting any other documentary proof. Accepted documents are –

The migrant workers, transferred employees etc., can now submit either the current or the permanent address proof while opening a bank account.

Also, while undergoing periodic updating, banks may request for address proof. If the current address is different from the address mentioned on the proof of address submitted by the customer, a simple declaration by her/him about her/his current address would be sufficient.

3. No separate KYC documentation is required while transferring accounts from one branch to another of the same bank

Once KYC is done by one branch of the bank, it is valid for transfer of the account to any other branch of the same bank. The customer would be allowed to transfer her/his account from one branch to another branch without restrictions and on the basis of declaration of his/her local address for communication.

4. Small Accounts

Those persons who do not have any of the ‘officially valid documents’ can open ‘small accounts’ with banks. A ‘small account’ can be opened on the basis of a self-attested photograph and putting her/his signature or thumb print in the presence of an official of the bank.

These accounts will have limitations like:

The account balance at any point of time should not exceed Rs 50,000

The total credits in one year should not exceed Rs 1 Lakh

In a month the total withdrawals are allowed upto Rs 10,000.

These accounts are valid upto 12 months.

If the account holder submits a document showing that he/she has applied for any of the valid documents then the validity of the account will be extended by 12 more months.

If a person does not have any of the ‘officially valid documents’ mentioned above, but if is categorized as ‘low risk’ by the banks, then she/he can open a bank account by submitting any one of the following documents:

(b) letter issued by a gazetted officer, with a duly attested photograph of the person.

6. Periodic updating of KYC

Time intervals for periodic updation of KYC for different risk profile customers has been recommended.

Low Risk bank customers – KYC should be done once in 10 years

Medium Risk customers – KYC once in 8 years

High Risk customers – Once in 2 years

7. Other relaxations

i. KYC verification of all the members of Self Help Groups (SHGs) is not required while opening the savings bank account of the SHG and KYC verification of only the officials of the SHGs would suffice. No separate KYC verification is needed at the time of credit linking the SHG.

ii. Foreign students have been allowed a time of one month for furnishing the proof of local address.

iii. In case a customer categorised as low risk is unable to submit the KYC documents due to genuine reasons, she/he may submit the documents to the bank within a period of six months from the date of opening account.

Sreekanth Reddy

Sreekanth is the Man behind ReLakhs.com. He is an Independent Certified Financial Planner (CFP), engaged in blogging, financial counseling & property consultancy for the last 6 years through his firm ReLakhs Financial Services . He is not associated with any Financial product / service provider.
The main aim of his blog is to "help investors take informed financial decisions."